The “fear of missing out”, stems from the comparisons we make- or what you could maybe call “keeping up with the Joneses”. I wish I had that car, those stock returns, that family, job, vacation, bank account, etc. This focus often leads to discontentment. I would be happier if I had X or Y... so we then covet- or simply put, develop a jealousy, that goes nowhere fast.
I have competed athletically my whole life, so I was confident that coaching kids would be a simple endeavor. Wrong. I quickly learned there is much more to being a coach than a player. There is no shortage of what I have learned about myself and my players. Now after specifically coaching my daughter’s team for 4 years I truly love it.
First, I get to spend time with my daughter and get to know her friends! Coaches played important roles in my life and I love that I can build into their lives today and for the future. My legacy in their lives is happening now and also later.
Second, it forced me to learn and get better. I didn’t know how to coach well, so I had to get some formal training from US Soccer. Now coaching kids makes a lot more sense and I continue to learn more each training session and match.
Third, coaching is direct and honest, which I enjoy. Even a tough conversation is focused to be helpful. My players trust me in that I have their best interests at heart. And I trust that they will listen.
Lastly, the focus is on longer term. The ability to win a game today at the expense of correct strategy and skills is not worth it. My goal is to develop each player to reach their potential, be the best they can be.
This discussion made me realize it really does compare well to my career. Financial planning and advising correctly are just like coaching. Both require passion, education, planning, direct conversations, trust and a long-term outlook.
It is a blessing to work with the families that I choose to advise or “coach”. They trust me as their go to guy. I get to know their families, hear their story- successes and failures, share in their dreams and discuss the possibilities that are ahead, God willing. I am passionate about this.
Education along with real life experience provides something powerful. Competence in what I know, the capabilities of my team and myself and sometimes more importantly, the limits of my expertise… and knowing the need to bring in the correct fellow “coach”, be it a CPA, Estate attorney, Charitable/trust advisor, etc.
Is your advisor passionate in their career, to learn about your life and see you succeed?
Are your advisors educated, experienced and practical in their approaches? Are they continuing to learn?
Does your advisor speak the language you understand and is willing to have that direct, honest conversation you may need (…not just what you want to hear)?
Do you have a long-term financial plan to help you be the best you can be and reach your goals?
To Your Financial Life Plan,
Luke Fields, CFP®
Any opinions are those of Luke Fields and not necessarily those of Raymond James. Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, Certified Financial Planner™ and CFP® in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
Alphabet Soup of Advisors
My favorite time of year is definitely fall, enjoying the cooler weather and fall activities. Fall makes me think of hearty bowls of chili and soup. Do you remember using alphabet soup to spell your name or possibly specific words for your siblings to read...? Hey, I only spelled them, I didn't actually say them.
In my profession as a Financial Planner, many questions come my way to clarify what I do and how I serve my clients. Mix those questions with the numerous designations available in the related industries to financial planning (investments, insurance, banking, etc) and you get well... alphabet soup. Basically, a lot of letters after people's names with not much explanation.
There is estimated to be over 100 financial designations (Investopedia, 2014). The range of experience, education and rigor needed to attain a particular designation greatly varies. Obtaining credentials sometimes requires a simple weekend read and a few vetted designations involve a year or more of intense study and exams. My designation, the CERTIFIED FINANCIAL PLANNER™ requires a minimum of three years full time experience, passing 6 exams including a comprehensive 10 hour, 2 day final. Then to maintain my mark, I must complete 30 hours of continuing education every two years. For a list explaining the numerous credentials out there, read more here.
- President Harry S. Truman
Halloween often brings some tricks and scares that are harmless fun. However, the lack of designation explanation and the "tricks" (we will call them) that many "advisors" employ are scary. We are talking about your financial plan, reaching your goals and growing your investments- your life savings! You need to clarify who you are working with and what they will do for your family.
It's called Full Disclosure. You need to ask, "how do you get paid?" Typically, you are better served as a client being billed by management fees versus commissions. This helps remove the conflict of interest involved with selling ("cha-ching" $...commission) and buying (again $... commission).
You want an independent advisor; one who is not employed by the big investment bank or insurance company in the name. The reason is simple- you want unbiased advice from an advisor, who can choose what is best for their clients, not be told to do what is best for the employer. The last thing you want is an employer telling your advisor to "sell or buy" such and such for you, their client.
Heard of Bernie Madoff? You want a safe third party holding your IRA, Roth IRA and/or investment accounts. It usually is not wise to allow an advisor to take direct reporting and handling control of your assets.
"Clients' interests always come first." This is the motto I live by and am required to uphold as a CERTIFIED FINANCIAL PLANNER™. As well, you want to make sure your advisor is appropriately licensed and professionally educated, not just self-taught.
Have you ever heard, "Sure, I'm a Financial Planner." Financial Planning means making a plan and guiding you along it. Many "advisors" say they are a financial planner but this unfortunately doesn't hold water with most of them. They simply want to just hold your investments. Yes, investment management is critically important, but it is only as good as your financial plan and utilizing the best options available to then reach your specific goals.
Another example, do you want your CPA diving into the world of investments and financial planning? Unless they have specific education, the time and most importantly the trained staff, the areas of tax accounting and financial planning are usually best left separate.
The advisor you hire must be someone you like (along with respect and trust). You will spend a good deal of time with them over the years and they will be instrumental in your success. They likely could become one of the most important people in your life and family's legacy- helping you dream, set goals and make plans to reach those goals.
For more on what questions to ask, follow this link.
Please reach out to me if you have questions about your current "advisor" or are seeking to hire a professional to assist your family.
To your financial success,
Luke Fields, CFP®
About Stewardship Cents
Stewardship Cents exists to Educate, Entertain and Enhance the financial wisdom of all who read it. Everyone needs to be wise with what has been entrusted to them and common sense can help us be good stewards of all that we have. Stewardship is a belief of responsible overseeing and protecting of important resources.Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981. A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a
™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses. He resides in Columbus, OH with his high school sweetheart, Beth and their three children. Luke is an active member of his church, serving in leadership and finances.
Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC
Good 'ole Social Security... a frequent topic of discussion, confusion and much misinformation among Americans of all ages. Social Security is a program that has greatly changed from its original intent, is difficult to understand, has caused a great deal of political controversy over the years and is considered an "endangered species" by many.
Whether you are about to elect your own benefits, assisting your parents on their choices or are a younger professional wondering about the future of Social Security, read on.
Often I have people tell me about a decision they just made and then ask "what do you think?" This is probably not a major issue if your decision was say... buying a new shirt or a pair of shoes (for you ladies out there). However, when it involves a decision that will affect your life (and family's life) forever...like electing your pension payout or social security- it is REALLY important. After the fact, whatever my opinion may be, it is irrelevant and you may not be able to reverse the decision you just made.
Social Security literally has thousands of possible claiming strategies and each option can greatly impact the amount of money you ultimately will collect from the program over your life. Let's talk before you elect your Social Security benefit.
Here are some important numbers you need to know and understand.
This is considered Full Retirement Age (FRA) for those born between 1943 and 1954. FRA gradually climbs to 66 and 11 months old for those born between 1955 and 1959. Birthdays 1960 and later, it is 67 at this time. FRA is the age you can claim your normal Social Security benefits.
The earliest you can claim and receive your benefits is when you turn 62. Be Cautioned... electing to receive your benefit early results in a 25% reduction of your benefits and often is irreversible after 12 months. Taking benefits early at 62 should be rare. Now I agree there are some situations in which it may make sense to claim benefits early (poor health and of course, the true need to meet living expenses), but they are few. Also working after 62 while claiming early can possibly further reduce your benefits received in that year.
In 2014, the average retired worker will receive $1,294 a month in benefits. The 2014 maximum monthly benefit for someone at the Full Retirement Age (FRA) is $2,642. This is based on 35 years of earning history (years of working don't need to be consecutive). Find your estimate here.
Will Social Security go broke? This I can't say with certainty. Heck, if I could... well that's another story.
I share with my clients that Social Security will likely continue to exist, but it will look rather different in the future. Those that are older and currently receiving benefits are more secure to receive expected benefits; those that are younger (born after 1970) cannot likely count on the program to help them much. Many baby-boomers have unfortunately relied too heavily on social security to help fund their ability to retire.
Younger folks need to take care of their retirement themselves by SAVING with the expectation that Social Security may not be much of an assistance in funding their retirement; and if it does provide a retirement benefit- it will just be "icing on the cake".
Rather than electing to receive your own working history benefit amount, you can opt for what is called a "spousal benefit." Taking 50% worth of your spouse's benefit amount may be larger.
Divorced? Just like regular spousal benefit, you can elect to receive 50% of your ex's benefit (whether ex is living or deceased), as long as you were married 10+ years, you are 62 years or older and are single. Your Ex will not know (since filing does not involve them, only the Social Security Admin) and it doesn't affect his or her benefit.
Once you hit Full Retirement Age, you may choose to delay taking your benefit. This can equal a big increase in your check. Each year you wait your benefit will grow by 8% until age 70, thus the four years from age 66 to 70 provides you a 32% increase in benefits. Possibly well worth the wait, if it fits your financial plan.
It is estimated that many Social Security recipients don't maximize their available benefits. This is "money left on the table."
As a trusted advisor, I regularly help clients determine the most suitable course of action not only in regards to Social Security-claiming options, but also in how those choices dovetail into their overall financial plan. You have to consider your likely longevity, coordinate your spouse's potential benefits, minimize taxes and maximize filing strategies (like "file and suspend") as you develop a retirement income plan that should comfortably last for decades.
To your happy Social Security benefit claiming,
Luke Fields, CFP®
Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981. A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is aCERTIFIED FINANCIAL PLANNER™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses. He resides in Columbus, OH with his high school sweetheart, Beth and their three children. Luke is an active member of his church, serving in leadership and finances.
Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC
My grandfather was a great man. He taught me many things such as work ethic, the importance of family, taking pride in my work and financial responsibility. His work ethic was tremendous. He retired after 30 years with Ohio Bell on a typical Friday and on Monday morning, started his new full time career as a stock broker. Although he meant well in his money savings, he didn't always strike a healthy balance. There are numerous family stories of his "unhealthy" frugality. My favorites involve him at age 75 roofing his house and at 77 black-topping his long driveway. His roofing project gathered the attention and aide of the younger men in the family. The driveway he had completed by himself before we even knew he did it.
My point in sharing about my grandfather is that he taught me invaluable lessons through his words and actions. I am very grateful. As parents and grandparents, we are responsible to teach wisely through our behavior and discussions with our kids and grandkids. A recent survey (by Capital One) revealed that only 20% of High School students reported regularly discussing financial topics with their parents. A whopping 34% said they have NEVER talked about money with their parents....34%! The average credit score High School students reported as a "good score" was 500. Oops (If you don't know, 500 is a bad score, good starts at 700 and excellent at 750+). Our kids need our help and it is never too late to start or change a behavior.
Some children will ask about finances on their own, however most will not.
Teaching our kids to save is a must. The key is to find what works for your family. Maybe it is a glass jar or a container with their favorite cartoon character. It is then important to discuss choices with their money-- Here is what my family uses to encourage a choice after money is earned.
Choices: 1.) Share (church) 2.) Save3.) Spend Then at some point the "piggy-bank" turns into a wallet/purse. Mint.com is a great free app to track and review spending habits. Or try AllowanceManager.com to track allowance.
The Value of a Dollar. There are different views on this. Key is to teach work ethic, responsibility and that nothing is free. Some say allowance should be earned, some say it should just be given. In our family, our kids have set things they must do (chores). Once those are completed for the whole week- they get a pay day. They have the opportunity to do extra chores or be thoughtful helping around the house to even earn extra money (a bonus).
Teach in the Moment. For example, at the grocery store as I swipe my credit card, I ask Kaitlyn, my nine year old, "Am I paying cash for our food?" The first time I asked this she was confused but since then, we have had many discussions why I am using credit- as a convenience and ONLY because I have the actual dollars in the bank to pay off my bill each month. Or try this- when that cool new car commercial comes on... pause the TV (right when all the fine print pops up). Ask them "Would you rather pay for the car and own it or pay for the car for 3 years and then give it back to the dealership?" I am not saying a lease is always a bad idea, but it is a money choice that has to made and understood.
Get a Job. The responsibility and duties of a job are extremely valuable. Think back to your first job- what did you learn? I bet similar learnings will be for your child.
Open a bank account. The simple balancing of a check book or using a debit card can be a big learning experience along with talking to a banker about their money. It is an important process to learn.
Seek out financial learning. Personal financial courses are sometimes offered in Middle School and typically in High School for your child. As well, ask your financial planner to meet with you and your child to share some ideas/tips. Any advisor worth something will love to do this to help educate and as a service to you as their client.
Start a Roth IRA. With a job, even if it is mowing lawns in the neighborhood- there is earned income, which is eligible for a Roth IRA contribution. Picking a suitable investment to watch encourages healthy retirement saving habits. Starting at age 15 and contributing a one-time $5,000 investment (with no additional investments) for 50 years, averaging 7% return will yield about $147,000 tax free at age 65.
Some Resources to check out, I mean it...
Money AS You Grow This site shares guidelines and talking points for specific age ranges with activities to complete from money basics, avoiding identity theft, credit cards to college loans.
Warren Buffett has created a great resource to teach kids about money using short animated episodes and a variety of other tools and family activities.
Teaching kids about money is not an easy task, but it is so necessary. Find what works for your child and family. Grandparents, come alongside your kids in teaching this to your grandkids; just like my grandfather. Fight to be consistent in allowance, chores, discussing topics and share from your money experiences- both the good and the bad. It will likely stretch you to also improve your current financial behavior.
To Your Child's and Grandchild's Financial Success,
Luke A. Fields, CFP®
All examples are hypothetical illustrations and are not intended to reflect the actual performance of any particular security. Future performance cannot be guaranteed and investment yields will fluctuate with market conditions. Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Luke Fields and not necessarily those of Raymond James. The companies and their opinions are not affiliated with Raymond James. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.
About Stewardship Cents
Stewardship Cents exists to Educate, Entertain and Enhance the financial wisdom of all who read it. Everyone needs to be wise with what has been entrusted to them and common sense can help us be good stewards of all that we have. Stewardship is a belief of responsible overseeing and protecting of important resources. Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981. A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a CERTIFIED FINANCIAL PLANNER™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses. He resides in Columbus, OH with his high school sweetheart, Beth and their three children. Luke is an active member of his church, serving in leadership and finances.
Follow additional insights and connect on LinkedIn, Facebook, his blog or Twitter. You can always reach him with comments or questions at: luke.fields@raymondjames.com.
Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC
Use the Right Ingredients and Follow the Recipe
I unknowingly started a tradition 4 years ago. It all began with making a cheesecake for Mother's Day for my wife, mother and mother-in-law. Since I do not consider myself talented in the kitchen, it was a complete stab in the dark to attempt this...very much outside my comfort zone. The cheesecake ended up being a big success and now it is a tradition. What I discovered was that, by following some good advice from my wife and following a specific recipe precisely, the results were considered the "best cheesecake ever eaten."
Diversification is like making Cheesecake.
You have to have the right ingredients, mixed together properly with the right timing to get an excellent cheesecake. This is also essential in the diversification of your investments. Diversification is equated to the proverbial"don't put all your eggs in one basket." While this is true to building a well-diversified portfolio, there is much more to it. Let me explain some key principles.
"Diversity reduces adversity."
-Burton Malkiel, Princeton Professor and Economist
Don't Put All Your Eggs in One Basket. Diversification seeks to spread the risk out into various investments (that have low correlation), thus reducing the volatility of a portfolio. Think of diversification like the shock absorbers on a car, smoothing out the bumpy (volatile) ride of financial market roads.
Get the Right Asset Mix. Variety is obviously important but the % allocation is important. Factors based on your personal risk tolerance, goals and time horizon help direct this. This is where your financial plan is essential.
Don't Over Do It.
Yes, you can have too much of a potentially good thing (like cheesecake)- it is called "over-diversification." This is a common problem. Spreading yourself too thin will likely mute your return. The focus should be on a variety of assets that are good quality, not the quantity.
Diversify Within Each Category. Your stocks should include the proper allocation of US stocks and International Stocks between large, mid and small sized companies. There are literally dozens of categories of bonds between Government, Corporates, Foreign, High Yield, Etc. Consider Real Estate, Commodities, Alternatives and Cash as other important diversifiers.
https://www.raymondjames.com/legal-disclosuresbetween Government, Corporates, Foreign, High Yield, etc. Consider Real Estate, Commodities, Alternatives and Cash as other important diversifiers.
Evaluate Other Allocations.
Do you have a large portion invested in your company's stock? This is likely a risk because you are over diversified between your gainful employment and your investments being tied so closely together. How about real estate? If you own rentals and properties you likely don't need real estate investments in your portfolio.
Timing is Key. Have patience and give it the correct amount of time. Diversification works over long economic cycles. Also attempting to time the market can't be consistently achieved, despite what some people say. Dollar Cost Averaging (regularly placing money on a monthly basis) can also be an effective method for investing your portfolio.
Diversification is a delicate balance of the right investments and the right time-frame. Utilize certified professional advice in making diversification work inside of your financial plan.
Enjoy some cheesecake too! Mine is not for sale- I only make it once a year and it goes quickly.
All the best in your planning,
Luke Fields, CFP®
The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material and does not constitute a recommendation. Any opinions are those of Luke Fields and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Diversification and asset allocation does not assure a profit or protect against a loss. Investing involves risk, you may lose you principal. Dollar-cost averaging cannot guarantee a profit or protect against a loss, and you should consider your financial ability to continue purchases through periods of low price levels.
About Stewardship Cents
Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC
Why a big tax refund may not be as great as you think. Are you awaiting for or have you already received a big tax refund? Most people who withhold taxes thru W-2 wage payments receive money back from the IRS. I recently heard someone say with pride "I made out good... the government is paying me $x,xxx." Well, sorry to tell you this but you didn't make out so well. A tax refund is simply your money that you overpaid- being returned to you. When you overpay your taxes you essentially just provided the government with an interest-free loan thru the course of the year. That is so generous of you.
Your goal should be to withhold as close as possible what you will end up owing. Some people liken their refund to a "forced savings" plan, which can be understandable if living paycheck to paycheck. For perspective though, a $3,000 refund equates to $250 or so that you can have in your pocket each month to use. This is why it is advisable to adjust your W-4 withholding each year after tax filing. The W-4 is a simple form you can use to provide to your HR/payroll department at work.
I realize that it is difficult to nail this number each year due to unexpected tax events that happen- children are born/leave the house, inheritances, bonuses, large deductions, etc. Your CPA can help suggest your withholding or your can estimate using a calculator.
Self Employed and Don't use a W-4 Withholding
If you are self-employed don't forget that you need to pay estimated quarterly tax payments (due on the 15th of April, June, September and January) in order to avoid penalties. These are to be 90% of your current year or 100% shown on your prior year's tax return filed, whichever is smaller.
You have a refund, so what should you consider now?
Adjust your W-4 withholdings for the current tax year, as discussed above.
Pay offyour credit card, student loans or other high interest rate debt.
Build up your Emergency Fund. Rainy days will happen.
Earmark your returnfor a "sinking fund," (a known expense) such as a car purchase or upcoming taxes.
Invest it. Too many reasons why this is a good idea to list in this post, call me.
Okay-the last suggestion, which is rather common (and I have been guilty of in the past): use for a vacation!
All the best,
Luke A Fields, CFP®
Any opinions are those of Luke Fields and not necessarily those of RJFS or Raymond James. You should discuss tax or legal matters with the appropriate professional.
Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC
Similar to many of you, I grew up with the annual tradition of "Spring Cleaning." Every teenager's idea of a great day. Open the windows, clean the crevices, throw out the junk, and organize the closet. Now that I'm grown up (that is debatable in some circles) and own a home, the funny thing is the same habit is still with me and I actually like it now. Things sure change.
1.) Clean up your Investment Portfolio. Year end is a great time for review in regards to taxable events and Spring is a wonderful time to make sure your investment accounts are healthy. Consider cleaning out (sell) the "dogs" in the portfolio, re-balance overweight or underweight categories. You don't want too many eggs in one basket or not enough diversification in other baskets. Make sure your portfolio is in-line with your current risk tolerance. Another common situation; are you keeping too much cash in the bank (likely at low interest rates) that you are not planning on needing anytime soon?
2.) Organize the Files. File cabinets are notorious as dumping grounds. You know that important piece of information is in there... you are just not sure where. Files also include your electronic files. As you wrap up tax time, consider scanning prior tax years on a secure hard drive. Previous advice was to shred after 7 years but a digital copy may be handy if the IRS ever comes knocking. Consider shredding other unneeded documents (make sure to use a cross cutting model). Remember to organize and clean out your wallet while you are at it.
3.) Review your Security Measures. I bet you keep your house locked and use an alarm when asleep or on vacation. The same security should be true for your computer, your personal identity, file cabinets and a fire proof box or safe. Consider investing in a good self-updating anti-virus software, identity protection services, and a safe (possibly even bolted down to the floor) in a discrete location. And please don't forget to update and change the numerous passwords you use.
4.) Purge and Update your Family Budget. I hope you have established a budget, if not get on it! Check your line items to see if they are still accurate- spending more or less in a category? Have a new expense or an old one to remove? Know where your money is and where it is going at all times!
|
|
Sign up for Stewardship Cents Here
If you know me, you know I love to ski. The problem is I live in Ohio. There is plenty of snow this year but not many mountains in Ohio, although one "resort" has a run called "Mt. Mansfield," all 300 vertical feet of it. My fondest memories growing up are of family ski trips; taking on challenging steep terrain with my brothers, being in spectacular mountains and the unforgettable tumbles my one brother became famous for executing. We would call them "yard sales," possibly you can figure out why. Think where all your junk gets thrown when you sell it.... The best part of our ski trips was the relationship cultivated between traveling together, skiing together, hanging out in the hot tub, eating dinner, you get the idea. We did all of it together. So now with my own little ones in training (minus our 3 year old for now), the investment starts now to someday reach the goal of our own family ski trips.
You may be wondering "what does skiing have to do with the Market?" In order to reach my goal of family ski trips, I have determined it takes consistent, regular investment (time, money, planning) in their learning, patience, coaching, a long time perspective, and sticking to the plan. The same is true for investing and always keeping perspective of your goals.
The advisors at my firm and I often hear questions on what to do when the markets make headlines or when the pundits start beating their drums. The first question is: Do you have a financial plan? If no, the second question is: Then why not..? You should consider getting a financial plan. It is the road map to your future, providing consistent direction and strategy. If you have a financial plan, has it changed since the last market headline? Probably not, so re-focus on what your plan is. And turn off the TV, the pundits don't add any value.
Determine your Goals and align them thru a strategic Financial Plan. This is in regards to your investments, insurance, college, taxes, legacy planning, you get the idea. It encompasses all areas. Remember the following:
Keep a long Time Horizon. My kids will not learn to ski on their first time out and your goals will not be reached overnight. For example, retirement takes years to attain with most people retiring in their late 60's. There are many different stages to successfully reaching a goal, seek to understand where you should be now.
Have Patience. Enough said? Maybe not. This is different than your time horizon. Do you fall down a lot when first learning to ski? It is realizing that it is not always easy to reach goals and unexpected things may challenge you. Your expectations may need to be adjusted depending on what happens in life and economic conditions you can't control like inflation/interest rates. There are no short cuts that work consistently. You can't repeatedly time or predict the markets so please don't try.
Determine what the "Right" Risk is for You. This is a highly individualized answer. Some people no matter how much skiing experience will ever be comfortable with a Double Black Diamond run. When thinking about your finances, Do you continually worry? If so, you may need to adjust your risk to a level you are more comfortable with. The stress you are causing yourself will not only decrease your enjoyment of life now but could possibly lead to health issues that may prevent you from enjoying your retirement goals to the fullest later.
Make Regular Investments. Few people can do something one time and be done. One time down the mountain or one investment contribution doesn't cut it. "Dollar Cost Averaging," or in other words, systematically and consistently investing money (think every pay check or every month) is a time-tested long term strategy used to help build wealth.
Seek Wise Counsel. I am a good skier but I know I am not the best to teach my kids, so I hire a professional ski instructor. Find a qualified and professional advisor or make sure your current "advisor" is the right one for you. A trusted advisor should always align themselves to your goals and what is in your best interests. If you don't know how to examine this, email me (luke.fields@raymondjames.com) and I will share the questions you should explore.
To Your Financial Success and Good Skiing,
|
|
|||
|
||||
Chances are you've made a New Year's resolution... or at least considered it. Most of us do make one (over 130 million Americans do) whether we announce it to someone or not. We all have something on our list to improve or change. The usual suspects range from fitness or weight loss, working less, to spending more time with family and oh yeah, don't forget those financial resolutions. This edition is not to tell you what your resolutions should be (although I can help if you need me to...) but to provide some helpful tips on how to keep them going. Setting resolutions is one thing, keeping them is the trick. By January's end studies suggest over 40% of people who set a resolution on December 31st have already ditched them or are about to. Maybe you should set one now? It's never a bad time to improve something in your life.
1. Be SMART. First and foremost make sure your resolution is Specific, Measurable, Attainable, Relevant and Time-specific. You should stretch yourself but maybe a reevaluation is in order.
2. Use the Buddy System. Find someone who shares the same resolution and double team the goal working together. This is spouse if it is a budget or a buddy for working out. This provides agreed upon accountability. As well, avoid those people who are negative or bring you down in reaching your goal. At the least, tell someone who will be supportive.
3. Write it and Post it. Spell it out clearly and post it somewhere you will see it every day, preferable at the time you need to remember to keep your resolution. There is something powerful about seeing your own handwriting! Post it on the fridge for diets, mirror for self-confidence improvement, your phone reminding you to daily read more or a card in your wallet by your credit card.
4. Eating an Elephant, One Bite at a Time. Short term goals are easier to achieve as you work towards the big goal. This will motivate you and provide accountability to make progress.
5. You Gotta Celebrate. Reward yourself for achieving little milestones and goals. Do something nice for yourself. Using your judgment, an occasional "cheat day" can help, as long as it doesn't throw you completely off the wagon.
6. Stick to It. Research shows that it takes 21 days for a new activity to become a habit and six months to become a part of your personality. I often tell my kids, "Nothing worthwhile comes easily."
7. You are Human. You will face temptation to overeat, overspend, oversleep, not stand up for yourself, sit on the couch, whatever your resolution is... and you may likely succumb to it. It is just a hiccup and not the end of the world or the end of your resolution. Refocus on why your resolution is important to you and worth the effort. You can do it.
Have a Blessed 2014!
To Your Success,
Luke A Fields, CFP®
Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981. A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a CERTIFIED FINANCIAL PLANNER™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses. He resides in Columbus, OH with his high school sweetheart, Beth and their three children. Luke is an active member of his church, serving in leadership and finances.
Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC
Family and traditions are at the forefront of mind for many of us during this time of year. We all likely have special traditions we enjoy celebrating with those we care about. We have much to be thankful for. Here is a recent fun night at the Fields' household.
Some of our clients know this family tradition I am about to share.... Some may need to be reminded and those of you who do not utilize our services as clients are about to learn something about us. The team at Foley and Foley Wealth Strategies has a "Family Service Policy" tradition. This means for our clients, we waive our account minimums and offer our services to their entire family, regardless of their asset level. Your Family is Our Family.
As you might know, Foley and Foley was established in 1981 by current financial advisor Kevin Foley and his father, Mark Foley (retired in the late 80's). As a family business, family has always been emphasized and therefore planned around. Since the 80's, it has been rewarding to implement our plans and expertise for three generations; Kevin and his dad's original clients, their children near retirement and now their kids (and grandkids) are beginning their careers and starting families.
A common situation we assist with is advising our client's children and grandchildren in whatever life stage they find themselves. Our policy also applies to client's siblings nearing retirement who would like professional advice with their retirement strategy. Another scenario that is on the rise is helping clients with their aging parent's estate planning. We are happy to guide you and your loved ones through each of these above examples, among other unique challenges you may face.
If you would like to talk more about how we can provide our family service policy to your family, please let me know.
To your family's success,
Luke A Fields, CFP®
|
|
I relish in opportunities to be a "big kid." Halloween time is the perfect example of just that. When else can you put on your favorite costume, use a whole can of hair spray to spike your colored hair like a rock star or don a Chewbacca mask? My kids love seeing their dad act unlike his usual self.... It's the perfect time to pretend to be someone (or something) else. You don't always know who is under that costume. You know I had to include a picture of Chewbacca....
Costumes are also worn in the professional world of finance. Have you ever been sold something to later wonder what did you just buy? One of my favorite warnings for people is about "the financial salesman" (or saleswoman). Beware, they can be scary. Often they look, act and even say the same things as an advisor but there are some major differences. Unlike a trusted financial advisor who should always seek your interests first, a salesman is usually controlled by a large corporation or investment firm that may encourage them to sell certain products by linking the sales of these products with compensation. Thus many consider what benefits them first, before the client. Many so-called "advisors" have worked this way their entire career, finding it difficult to change. Today, at some firms similar training still continues of their employees, even if it is more discreet. If a product is bought with them, a large commission is deposited to them and then there may be little ongoing incentive to advise that client.
It is common to meet new people seeking an honest 2nd opinion after they have already bought a product. Many of them were sold a product by a salesman which they really didn't understand and many find that the product was not really appropriate for them. When this occurs, typically I find the products sold to them are annuities and/or various life insurance policies. Don't get me wrong, not all of these products are bad and they definitely have their appropriate uses. Annuities can be a good option for certain people, but it deeply depends on the guarantees offered as well as other benefits, risks, and the overall suitability of the product for the client. Historically, there have been some good products in the past but I haven't really found many compelling benefit concepts since 2008. However, if I found a good guarantee offer I would consider it for a portion of a client's financial plan. Some newer products have very complex intra-workings for the average person to understand. "If you can't sell them, confuse them" -into buying comes to mind. Many annuities have very high annual expenses, limited investment options to choose from and they can carry significant surrender charges if you want to surrender early. Here exposes a huge difference between the advisor and the salesman. These types of products can often pay big commissions and this may lead a salesman to sell a product to many individuals for whom it may not be appropriate. While a trustworthy advisor considers the big picture and provides all reasonable options with the pros and cons of each, followed by a recommendation for what is best for the client's goals.
A compelling and fair way for clients to work with a financial advisor is with a trusted advisor who is both independent and offers a fee based arrangement.* This is so whatever investment or product is used, the advisor is not compensated by a commission on the sale of a product, but rather with a fee that is charged based upon a percentage of assets managed and also importantly is not required to sell proprietary products since they are independent.
About Stewardship Cents Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981. A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a CERTIFIED FINANCIAL PLANNER™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses. He resides in Columbus, OH with his high school sweetheart, Beth and their three children. Luke is an active member of his church, serving in leadership and finances.
Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC
Click Here to Subscribe to Stewardship Cents
I love a good surprise. Bad surprises not so much… so let’s focus on the good ones. It’s nice to have something unexpected and enjoyable surprise us. Like you, I think of a few examples in my life: “popping the question” to my girlfriend now over 13 years ago (AND the surprise that she actually said YES! …simply amazing), hosting a huge surprise party for my wife (and she had no idea), or being told my first child was on the way! Ok, these are the big surprises in life, but I also enjoy receiving and sharing the smaller ones too.
I recently had the chance to surprise a client during his portfolio review. He is nearing his planned retirement date and shared that he was not thrilled with the lack of investment options and marginal/poor performance of his retirement plan options. Unfortunately, this is a common problem with the vast majority of company 401(k) and 403(b)s. In discussing his company’s 401(k) plan, I shared that since he was over 59 ½ he had the ability (while still working) to rollover the majority of his 401(k) assets to a self-directed IRA. It is called an “In-Service Distribution” and is a NON-taxable event when done correctly. He was thrilled to have the opportunity to diversify his investments, select from most any investment choice (mutual funds, stocks, ETFs, Individual bonds) and have professional guidance in the process. I further explained that he would continue to receive his company’s 401(k) match and be allowed to continue to defer his annual maximum contribution. With a smile all he said was, “let’s get it done.”
In addition to rolling over your 401(k) to an IRA, there are other options. Here is a brief look at all your options. For additional information and what is suitable for your particular situation, please consult us.
1. - Leave money in your former employer's plan, if permitted
Pro: May like the investments offered in the plan and may not have a fee for leaving it in the plan. Not a taxable event.
2. Roll over the assets to your new employer's plan, if one is available and it is permitted.
Pro: Keeping it all together and larger sum of money working for you, not a taxable event
Con: Not all employer plans accept rollovers.
3. Rollover to an IRA
Pro: Likely more investment options, not a taxable event, consolidating accounts and locations
Con: usually fee involved, potential termination fees
4. Cash out the account
Con: A taxable event, loss of investing potential. Costly for young individuals under 59 ½; there is a penalty of 10% in addition to income taxes.
Be sure to consider all of your available options and the applicable fees and features of each option before moving your retirement assets.
The opportunity for an in-service distribution also applies to most 403(b)’s, 457’s and some pensions.
Another plan of action is to use an in-service distribution to direct a portion into your Roth IRA. Although this would be a taxable event, it would allow you to place money in a Roth IRA to obtain tax free growth and tax free withdrawals during retirement, among several other benefits.
As well, if you happen to have after-tax contributions in your company’s retirement plan, if the plan allows, you may be able to convert those contributions to a Roth IRA.
Many high wage earners, based on their single tax filing ($112-127k in 2013) or married filing joint ($178-188k) are prevented from contributing to a Roth IRA. Regardless of your age or income level you may be able to contribute to a Roth account inside of your 401(k); check to see if you company’s retirement plan offers a ROTH 401(k) option.
If you would like a “checkup” of your current situation or for me to investigate if your plan allows the above options, please don’t hesitate to contact me.
To the surprises both big and small in life,
Luke Fields, CFP®
Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC
Roth 401(k) plans are long-term retirement savings vehicles. Contributions to a Roth 401(k) are never tax deductible, but if certain conditions are met, distributions will be completely income tax free. Unlike Roth IRAs, Roth 401(k) participants are subject to required minimum distributions at age 72 (70 ½ if you reach 70 ½ before January 1, 2020).
Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to its own five-year holding period. Converting a traditional IRA into a Roth IRA has tax implications. Investors should consult a tax advisor before deciding to do a conversion.
Sign up HERE to receive Stewardship Cents Newsletter
Back to school time, I had a school bus sighting this morning. Sorry kids. Typically parents smile, kids of all ages groan. I remember getting those butterflies in the deepest pit of my stomach- wondering how my teacher would be, will I remember my multiplication facts, when lunch was and most importantly who would be on recess with me? It always worked out and I developed a life-long love for learning. I am grateful to all the teachers and my parents for this.
I hope it has been a great summer break for your family.
We all agree education is invaluable and college prepares most of us for a career. I think we also all agree that education is not cheap and is continuing to rise. The typical increase year over year for tuition, room and board is 5 to 8%. The average tuition, room and board is $18,400; this breaks down at $13,600 for in state public and $36,300 for private institutions (For those of you who want numbers here are my rough calculations: using the lower end of the average Inflation at 5% and current average cost $18,400; in 18 years the cost will be $44,281. Here is why you should save. Hypothetically, saving $200 a month from birth to 18, earning 7% returns will provide $86,647). I hesitate to put numbers in here, for I do not want to daunt you, but it is the reality. I hope college inflation costs come way down and accounts earn well above 7%.
College planning needs to be a part of every family's financial plan. The average family will likely fund school using a combination of 529 savings, student loans, cash on hand and thru student employment. Whether for your children or grandchildren there are ways to prepare now- it is never too late to start. Typically the best way to save money for college is thru the use of 529 college savings plans.
Tax Advantages There are several benefits.
Gifting and Estate Tax Advantages A Valuable tool in Estate Planning
Control and Flexibility Most people don't know these points.
To read more about 529 College Plans, Click Here.
Educational planning is another vital piece in a family's financial planning strategy. It has to be balanced with your retirement savings (so you don't ignore appropriately saving for your own retirement- otherwise, the kids will be taking care of you), your current tuition needs if you children are in private K-12 and systematic so you grow into the habit of saving now. It can be a huge blessing to your children or grandchildren, while also providing some great tax and estate benefits.
I routinely perform education needs analysis for clients and those introduced to me.
Let me know how I can help.
|
|
|||
|
|
||||
![SC_Header_600px2a4bf3[1]](http://static1.squarespace.com/static/54e22be1e4b0f4a6ba36154f/55783de2e4b0074df64cd770/55783de2e4b0074df64cd7db/1361823034000/SC_Header_600px2a4bf31.png?format=original)
When I started dating my wife in high school, I became known by her family as the "garbage disposal." Endearing isn't it?! Let me explain. In my family, I was the youngest of three very active boys and although we always had enough food... dinner often became a territorial "grab and growl" event. Now for my wife's family; she was the oldest of four siblings. Her sister and two little brothers ate like birds and I LOVED it. I didn't have to even ask "are you going to finish that," the plates all slid down to my spot. So I became the "garbage disposal," not because I am a glutinous pig but because first, I am always doing something athletic so my metabolism stirs my hunger (a little less now days I must admit) and second I have a principle that I can't stand to waste food. Now with three children of my own, it continues. Food has to be really "kid sabotaged" for even me to pitch it. Food is just one example of a resource we enjoy.
What do you think of when I say the word "resource?" Maybe money, investments, a business, property or natural resources (oil, lumber, water) come to mind. All true, but there are many other resources that go beyond the traditional "assets" that I want to challenge you to ponder.
Most of us are blessed with family, friends, jobs, and a community of people that care and love us. These are resources. As we celebrated our nation's independence this month, contemplate the resources we have as US citizens; they go far beyond our financial assets. We are a land of opportunity and freedom. Sure there are plenty of things that need improved, fixed and fought to be preserved in our country but overall among nations we are blessed.
How about the resources you have been blessed with by our creator? - Your skills, talents, personality, and time. I believe (as you probably know by reading my newsletters) that we are accountable and responsible for what has been entrusted to each of us. You've heard before "to whom much is given, much is required." So what does that mean?
It means Stewardship.
Stewardship is the responsible overseeing and protecting of important resources. This includes of course, the money in your wallet- whether you have $5 or $5 Million, but it goes beyond your finances. Consider how you provide for your most valuable and important resource? - Likely this is your family. We strive to nurture, protect, educate and model for them virtuous values.
One of my overall objectives in my career as a financial advisor is to help you determine what Stewardship means for your family. It is a unique solution for each of us and so important to strive towards. Identifying what this means significantly enhances my expertise in helping you develop a financial plan that is accurate and true to your goals- both financially and personally. Then I can appropriately manage your assets and help you protect your family. They cannot be separated.
Consider me not just a financial planner but a financial LIFE planner.
Let me know how I can be of service.
Luke
|
|
|||
|
||||
Signup for Stewardship Cents Newsletter (click here to subscribe)
Death and Taxes. Yes, these are such fun topics to discuss. No sarcasm here....
Good old Ben Franklin said it like this "but in the world nothing can be said to be certain except death and taxes." Focus on the word "Certain." It doesn't leave much room for exceptions; unless you happen to be Jesus or decide to criminally evade taxes (but we all know that's a BAD idea).
We just survived another eventful tax time and I recently faced the realities of death while standing at a graveside burial. Both are certain to occur and both require thoughtful planning. These are the realities all must plan for.
Taxes and Death (estate planning) are not simple issues to address. Taxes can invoke some to worry, stress and write large checks. When considering death, it touches all of our humanly "levels" from the emotional, spiritual and of course the eventual physical end.
These events are certain to occur, but you can also be certain on how they play out. It should be your goal to be a good steward of your resources and have your wishes fulfilled. Tax planning should be efficient, aiding your accumulation of assets and withdrawal strategy. Planning is especially imperative if you own a business, own valuable properties, have major life events occur (marriage, divorce, birth of children/grandchildren, inheritances, death, etc), own stock options or have an anticipated large taxable transaction approaching. Estate Planning and evaluating your legacy wishes involves answering critical questions, such as: Who do you want to receive your estate? How should they best receive it? And when should it smoothly transact? Your tax situation and the recipient's tax situation comes into play, the ages of your beneficiaries, possible special needs of your beneficiaries, desired requests to guide unwise heirs or protect from the "all too eager" inheritors.
Although not licensed to perform your taxes or write your will and trust, I do help steer you along the way in regards to taxes and your estate plan so they compliment and fulfill your financial plan. Then once we have your wishes determined, I work alongside your trusted CPA or Attorney (often recommending a qualified referral if you need one) to place your legacy plans into action. Remember your financial plan encompasses numerous different areas and is the road map to implement your goals.
|
|||||||||
Here is a hypothetical story of a stock owned by a successful business man, a seasoned investor. We will call him Paul. This was a stock with opportunity for growth- the boys on Wall Street loved it and it had been on a "tear," showing no sign of stopping. Paul excitedly buys a large portion in his portfolio expecting the stock to continue its trajectory "to the moon." All goes as planned; he is up 15% in a few weeks... Then it happens. The unthinkable- his stock goes down and down and down again. The once "sure" stock selection is now down 40%. Not so exciting now.... What if Paul said "ok no problem, I only need it to go up 40% to break-even!"
Do you believe him?
Well if you do- that is okay, many people do at first glance. Here is the reality: Gaining 40% won't get him back to even.... The gain needed is +66.67% (FYI- if the loss is 50%, you need +100%)! This is the power of percentages. We have all been there at one time in our lives. This story exposes the necessity to manage risk.
The professional planning around investments requires considering the big picture: your goals, time horizon, true diversification, estate plans, taxes, the current economic outlook and most importantly the real acceptable risk to you. Many people acknowledge risk, "sure it can go down"... however most never accept risk, "I can afford to lose $xxx." Risk is real. It is necessary. And risk is okay, when the framework of investment management focuses on it.
Benjamin Graham, considered the father of value investing wrote,
In the current market environment with the Indexes hitting all-time highs, now is the time to know what risk is acceptable to you and preserve accordingly. We've seen great growth the last several years, but you need to manage the risk in your portfolio. Yes, the market may continue to grind higher but what if it doesn't? Is your true acceptable risk alright with you? Make sure your primary goals are achieved. Is your goal capital preservation, income generation, or long term growth for retirement? Seek professional and appropriate advice to have your portfolio evaluated and find your acceptable risk.... You can often hear me say, "If you appropriately manage the risks the returns will take care of themselves."
Luke Fields is Vice President of Foley & Foley Wealth Strategies, An Independent Firm, that has been based in Worthington, Ohio since 1981. A graduate from The Max M. Fisher College of Business at The Ohio State University, Luke is a CERTIFIED FINANCIAL PLANNER™, holding his Series 7, 66 and Ohio Life, Health and Variable Annuity Insurance licenses. He resides in Columbus, OH with his high school sweetheart, Beth and their three children. Luke is an active member of his church, serving in leadership and finances.
Follow additional insights and connect on LinkedIn, Facebook, his blog or Twitter. You can always reach him with comments or questions at: luke.fields@raymondjames.com.Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC
Sign up to receive Stewardship Cents Newsletter, Click Here.
There is a story of the famous comedian Groucho Marx, who while touring the New York Stock Exchange had a floor trader yell out at him, "Hey Groucho, where do you invest your money?" The leader of the Marx brother replied, "I keep my money in Treasury bonds." "They don't make you much money," a trader shouted back. "They do," Groucho said smugly, "if you have enough of them...."
Historically, US Treasuries have provided what some consider "guaranteed" fixed coupon of interest and are called by many as "risk-free assets." However, the associated risks must be evaluated as our world and economic environments change. Often investors fail to decipher the numerous categories of bonds; NOT ALL BONDS ARE CREATED EQUAL. Literally, there are dozens of categories- US Corporate, Tax Free Municipals, US Gov't (notes, bills, bonds), International, Emerging market bonds to name a few; each with different interest rate, credit, currency and liquidity risks.
What is Interest rate risk? Think of bonds like a seesaw. When interest rates go up, the price of bonds typically go down. And vice-versea. If you are forced to sell your bond before its maturity or you purchased at a premium (an amount higher than its issue price) you will receive less principal than you originally invested. What is Credit rate risk? It is the risk that the issuer of the bond will go belly up. The financial health of the issuer is critical.
One of the first rules of investing is to know what you own. Bonds (fixed income) play an important role in a well-diversified portfolio alongside stocks, alternatives, and cash alternatives. Fixed income allocations typically help provide stability to a portfolio (as they are historically less volatile) and regular income. We've enjoyed a 30 year interest rate "tail wind" as US Treasury rates have declined from their 1980s high of 15.32%. This provided between 1980 and 2011 an average annual return of 8.68%*, which is similar to historical equity returns with a risk profile lower than equities during the same time period. I do believe the US Government will continue to pay bondholders interest on their obligations; however the interest rate risk associated with certain bonds, namely long-dated Treasuries, is real. As rates increase over the next few years (no one knows when, how much or how quickly- the Federal Reserve has their work cut out for them), the pricing impact could be substantial to certain bond investors. This is particularly concerning for the more conservative and/or older investor nearing or in retirement, who believes they are in "safe" bonds. While timely payment of principal and interest payments on US government bonds and Treasury bills is guaranteed, the principal value can fluctuate with market conditions and investors could incur a loss of principal is sold prior to maturity.
On a daily basis I review portfolios of clients and prospective clients that are seeking answers to help them understand the true risk of their bonds. Remember, your investment goals should dictate your investments and in this case the type of bonds you should utilize. Maintaining consistent income, stable value and beating projected inflation rates should be areas of focus for your bond allocation.
Click here if you would like to read more about bonds.
The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Luke Fields and not necessarily those of RJFS or Raymond James. Investments mentioned may not be suitable for all investors. Past performance may not be indicative of future results. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise. U.S. government bond and Treasury bills are guaranteed by the U.S. government and if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government.
*1980-2011 Barclays Aggregate bond index, formerly known as Lehman Brothers Agg bond index prior to 2008.
|
|
To Sign up to receive Stewardship Cents, Click Here.
When my wife and I were first married, with no kids and plenty of time, I was very meticulous about the care of my lawn. If you were to ask her, she would describe me as "anal." As many of you know, over time having kids along with numerous commitments and a growing business has a way of changing things. My meticulous ground keeping has now become simply a desire to grow grass. As spring emerges it makes me think of many home related activities beyond my ideal beautiful lawn. The aesthetics of your home is important but the financial health of your home is critical. Far too many people who call themselves "advisors" fail to address one of their clients' largest assets and contributor of net worth, their home. Those of you who work with me know that from our planning reviews it is important to be a good steward of your home financially, which means reviewing your loan. So to provide extended advice as a service to you, I've asked a good friend of mine Bob McKearin, to share his thoughts as a mortgage specialist.
Let me know if you have any questions and feel free to reach out to Bob.
First, I want to reiterate the comments made by a Chief Economist at one of the major lending institutions in the country. He says, "People who can benefit from refinancing are literally crazy if they don't take advantage of it now. The risks-rewards are so tilted toward action that it makes no sense to sit on the sidelines."
It is important to realize mortgage interest rates truly are at historic lows! Most homeowners in the country have never experienced mortgage rates at these levels.
When refinancing a mortgage there is more to the decision than just lowering the rate or obtaining a lower payment. Borrowers need to know WHY they want to refinance.
The list can go on and on. The point is to know what your objective is so the loan can be structured properly. Consulting with your Financial Advisor will help determine the course of action to take. This will help you receive maximum benefit.
It is no secret lenders have tightened credit standards since the real estate crash. The purpose for tighter standards is to reduce defaults and loan buybacks. Accomplishing these objectives benefit us all. Suggestion...don't go into the approval process with a mind set of "doing battle" with your chosen lender. Many borrowers try to tell the lender what they need to complete their job. It doesn't work that way. The lender holds the purse strings and tells the borrower what they need. Save yourself a lot of headaches and provide the documentation requested, sometimes you may have to provide it a second time. Do as requested and it will make your life a lot easier. You will reach your goal to save money much sooner.
Since we are a month away from April 15th when taxes are due, it is a very good time to look into refinancing your mortgage. You are already organizing your financial records so you just need to make copies to provide your lender. The initial documents required when applying for a mortgage are:
(Depending on a borrower's specific situation additional documentation may be required)
When choosing a lender it is important to select a lender with a very strong reputation. There are all sorts to choose from: large, small, internet, banks, brokers, etc. but their reputation is a key element. Check the Chamber of Commerce or Better Business Bureau. There is a lot more to consider than just a low rate.
When it comes to a loan originator, select someone who is a specialist in all aspects of loan origination. It is important to select someone who listens to you outline your objectives and then can lead you through the process. Most people rely on recommendations from friends and family because they will learn how reliable and trustworthy their loan originator was.
The goal of a highly professional loan originator is to provide top quality service to their client which will result in multiple referrals from that same client. They want to build relationships with their clients that will stand the test of time. To accomplish this they need to earn their client's trust.
According to economic experts, rates are at historic 69 year lows. Don't sit on the sidelines and miss the opportunity. There are a host of programs to address the needs of many homeowners. The time to obtain a mortgage evaluation is NOW!
Bob McKearin | Branch Manager - Mortgage Specialist Equity Resources, Inc. 7251 Sawmill Rd. | Dublin, OH 43016 | Phone 614-832-1967 | Fax 614-467-3924 Email rmckearin@callequity.net, NMLS #382060. OH MB800302. LO.038669.
The opinions and services of Bob McKearin and Equity Resources are independent of Raymond James.
|
|
